Alan's bonus of contention

THERE was one missing element from Trade Secretary Patricia Hewitt's announcement that former Asda boss Allan Leighton is to take on the challenge of Consignia.

As non-executive chairman, Leighton has agreed to devote at least two days a week to the task and to shed some of the other long list of duties he took on since parting company with Asda owners Wal-Mart.

For accepting one of the most challenging roles in British industry, Leighton will notionally receive a non-executive salary of just £20,000 a year - making him one of the biggest bargains on Britain's corporate scene.

However, in keeping with Hewitt's belief that executives should be well rewarded for good work, she is seeking to build an element of performance-related pay into his contract. If Leighton meets a series of benchmarks being set by the DTI, aimed at restoring the profitability and reliability of the postal sercompany-vice, he might achieve an income of £200,000 - 10 times his basic pay.

This may seem a glorious sum for the average postal worker, worrying about whether the job will still be there after Leighton and company have wielded the axe. But it pales into insignificance in contrast with the munificent pay awards some commercial leaders take home irrespective of performance.

The gap between those at the top and those in the call centre or on the factory floor has widened exponentially in recent years, as new research by the TUC shows.

As for Leighton, he has an unenviable task. Turning the supertanker that is the Post Office is not going to be easy and it will be a painful process. The first stage of cost cuts envisages 15,000 jobs going, but that could easily escalate to 30,000 or even 40,000 as rolling redundancies are put through.

This may seem extreme. But one only has to look at British Telecom since privatisation to understand the degree of overmanning that existed under nationalisation. Its staff has come down from more than 240,000 to 112,000 now - largely on a voluntary basis and almost without anyone noticing.

Leighton will need more than cost cuts to turn Consignia around. If he manages that, he will be well worth his modest (by BT standards) bonus.

Atlantic warsTHE failure of BAE to provide a full explanation for the sudden departure of chief executive John Weston is a classic mistake. By failing to offer shareholders a proper explanation, BAE opens itself to all manner of speculation.

This is particularly serious for a company which in the not so distant-past had a reputation for poor corporate governance, lax financial controls and a distinct lack of transparency in relation to defence contracts.

If this were not enough to set the pulses racing, the resignation took place 24 hours after a former BAE employee appeared in court charged with stealing secrets of Stealth technology, one of America's key strategic systems. Added together, this might seem like the ingredients of a good Frederick Forsyth yarn.

Investors will hope the explanations are more prosaic. BAE's management was starting to look rather top heavy.

Executive chairman Sir Richard Evans, one of the veterans of Britain's aerospace industry, may well have gathered rather too many chiefs around him. As well as having Weston as chief executive, the company also had a chief operating officer in Michael Turner, who steps up to replace Weston.

In addition, the company has ceded executive power to Mark Ronald, president and chief executive officer for BAE Systems in North America, increasingly the most important operating arm.

Over a quarter of BAE income comes from the US and with President George W Bush pushing hard on the accelerator of defence budgets after September 11, BAE as Europe's most important defence contractor in the US, stands to grow even bigger.

In fact, Patricia Hewitt has just ruled that American shareholders can raise their holding in BAE (and Roll-Royce) to above 50% as long as no single foreign shareholder grabs 15%.

As for Weston, there was some suggestion last night that while he had done a good job integrating the £8bn Marconi defence systems acquisition, he was not seen as the man to lead the assault on America into its next phase.

While investors may dislike the smell of cordite in the boardroom, a row at the top is infinitely preferable to some of the more colourful guesses at reasons for his departure.